Friday, March 29, 2024

6 Things About IRS Your Teachers Wouldn’t Tell You.

April 29, 2019 by  
Filed under Business, Money, Opinion, Weekly Columns

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(ThyBlackMan.com) Few things in life are as certain as the obligation to pay taxes, and few things feel as stressful. Yearly changes in the government’s federal tax code can make the already difficult process downright confusing. As a result, even the most seasoned of taxpayers can miss or overlook opportunities to increase their refund, limit what they owe, or simplify the process.

We’ve found six lesser known ways to help you understand your taxes and ease your IRS tax burden this year.

1. Limit your chances for an audit.

Generally, the IRS only audits less than 1% of taxes filed in a fiscal year, so while your chances of being audited may be slim, it’s wise to know red flags for the IRS. Audits are most often triggered by unusually large deductions, third-party referrals, and losses from year to year. Wages earned from rental income or self-employment income are most likely to be reviewed to make sure the income reported is in line with the deductions claimed. Double check your income to deduction ratio, especially if you earn self-employment or rental income.

2. File taxes, even if you don’t think you earned enough to owe.

For example, if you are 65 and single in 2018 you only need to file taxes if you earned $12,000 or more – the standard deduction for a single taxpayer. However, if you qualify for Earned Income Tax Credit, Additional Child Tax Credit, Education Credits, or Health Coverage Tax Credit, you may still be owed a refund. Consider filing, even if your income is below the standard deduction for your circumstances, you may qualify for a refund.

3. Utilize free filing software.

You may be eligible to utilize one of several free federal tax filing software (some companies offer free state filing as well) if your adjusted gross income is below $66,000 or if you are active military personnel. The IRS currently provides access to several options and a free file software lookup tool on their website.

4. Get your refund fast!

To receive your refund as quickly as possible, experts encourage taxpayers to do these three things – file as early as you can, file online, and opt to receive your refund electronically. In fact, filing your taxes electronically will make the biggest difference in how quickly your refund is credited to you. Last year, online filers who chose direct deposit received their refunds in less than 21 days from the date the return was received.

5. File by the deadline, regardless of your ability to pay what you owe.

Even if you are unable to pay your tax bill in full, don’t put off filing. Generally, the failure-to-pay penalty is less than the failure-to-file penalty, and if you meet certain criteria, you may be eligible for payment plans or an offer in compromise. Reduce the penalties you will pay by filing on time, then working toward a payment solution.

6. Don’t despair if your tax bill feels excessive, you may qualify for help.

If you owe more than you can reasonably pay, find a payment solution. An IRS offer in compromise allows debtors to settle large tax debts that they are unable to pay. Debtors can often either resolve their tax debts for less than they owe or reach a settlement agreement in the taxpayer’s favor.

Nobody wants to pay income tax, but it remains a necessary yearly obligation for most Americans. Staying informed about how to avoid an audit, which tax credits you may be eligible for, how to receive your refund as quickly as possible, and qualifying options to resolve your tax burden can help make your tax season a simpler, more streamlined process.

Staff Writer; Ted Brown


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